Archive for March, 2004

If you thought that political betting was just about predicting how many seats the Tories will get at the General Election or whether Charles Kennedy will step down then think again. The Tradesports organisation has an amazing array of betting markets that are simply not conceivable in the UK. The company is based in Ireland but focuses on the US market.

In their “Current Events” section there’s a healthy market on terrorism. If you reckon that there’s going to be a terrorist incident that will be of such a magnitude that the level of US Homeland security has to be raised from Yellow to Red then you can bet on it. Mind you – if you did put a lot of money on this and won then I’m sure that would not go unnoticed by the authorities and some funny policemen would soon be knocking at your door at 6 in the morning! Reassuringly the current favourite is Yellow (condition elevated). But who is betting on this stuff?

You can bet when you expect Osama Bin Laden to be captured or if you think Yasser Arafat will depart from Palestine. There’s also a market on whether a Palestinian State will be established by 31 December 2005.

In the main politics section there’s a healthy market on who will be Kerry’s running mate. I notice that no UK bookmakers have put this on their agenda. It could be interesting.

If you have a legal bent there’s even a market on how long the Martha Stewart jail sentence will be. Michael Jackson fans might want to make a punt on the outcome of his court case. If that happened in the UK the courts would surely rule that the bookmaker was in contempt.

Looking at the site I wondered whether the CIA or some other part of the US security apparatus might have some influence. There was a series of stories last year about a plan to create markets in “terrorist subjects” as a way of flushing out information – the theory being that people are by nature greedy and if they have some information they will try to profit from it. At the time it was announced that the plan was dropped – or was it?

One of the most fascinating political betting markets is the Iowa Electronic Exchange that is run by the university there as a way of studying how markets operate. To bet you buy “shares” in what you think is going to happen. These are priced at less than $1 which is what you receive if your selection wins. So if you buy Bush now at, say, 0.55 you will get a dollar for each share should he win the largest share of the vote in November. You can trade them 24 hours a day.

There is usually a huge amount of liquidity in the markets and the prices are a good indicator of informed US opinion. To compare an IEM price with a UK one you divide 1 by the IEM price. Thus an IEM quote of 0.25 would equal decimal price of 4 which equates to a standard betting shop odds of 3-1.

Quite often the Iowa prices will be much more sensitive than, say, a betting exchange in the UK and are often a good indicator of how the market is moving. If you want to become an IEM trader you can do – even if you live outside the US. But there is a danger – you bet in US dollars and the exchange rate could change.

At the time of posting the best UK bookie price on the Republicans is 8/13 or 1.61 and Betfair is showing 1.73. The Iowa quote is the equivalent of 10/11. But note that Iowa is on the share of the vote for Bush not who wins while the UK bookie prices are on the party.

The latest YouGov poll, published this morning in the Daily Telegraph, shows almost no change in March and would produce a hung parliament. The following is the split together with a projection from Financialcalculus of the distribution of seats at a General Election assuming a universal swing across the whole of the UK.

Con 39 – 271 seats
Lab 34 – 300 seats
LD 20 – 46 seats

Thus Labour would be 23 seats short of a Commons majority.

YouGov is the only major pollster to carry out all its surveys online (see previous posting) and is the only one to be showing a Tory lead. The other three polls this month – MORI, ICM and Populus – all showed almost no change.

In an interesting move a few weeks ago Michael Howard ended YouGov’s contract as the Tory party’s private pollster. This was in the Guardian on February 26 –

“Michael Howard is distancing himself from an important legacy of Iain Duncan Smith by refusing to renew the Tories’ contract with a polling organisation criticised for providing rosy results….
The decision was welcomed by senior party figures, dismayed by YouGov’s positive results, used by Mr Duncan Smith to show his success. The low point came in the run-up to last year’s conference when he told anxious donors that his speech would give him a five-point bounce in the polls – the exact figure in YouGov’s first post-conference survey.
YouGov has also come in for criticisms because it polls over the internet. Other polling organisations say that the best results come from interviewing face-to-face, or by telephone.”

Given that YouGov was the only polling organisation to accurately predict the 2001 General Election this was probably unfair. My guess is that Howard does not want YouGov’s generally favourably polls being undermined by the company being seen as the party’s tame in-house pollster.

A big issue for political gamblers at the next UK General Election will be whether we can trust opinion polls that are carried out online, rather than by the traditional routes of telephone or face-to-face interviews. There’s a huge debate on the issue within the opinion poll community so it won’t just be the party officials who will be biting their finger nails on election night. In 2001 all the traditional pollsters wildly exaggerated the Labour lead and underestimated the Tories. The one opinion poll to get closest was the online firm, YouGov – the question is whether they will be able to repeat the performance next time.

For political gamblers opinion polls are a great asset, giving clear pointers to the way that people are going to vote, but they can also be a curse if they give misleading signals that lead to money being wasted. Polls affect market prices and profits can be made if can you can spot a “dud” and bet accordingly. They also affect voting because if an election looks like a foregone conclusion fewer people will vote in the belief that it does not matter. But if it looks tight then many more will come out.

In the UK the issue is that for years the conventional polls have found it difficult to assess the strength of the Tories because their supporters seem reluctant to admit their intentions to opinion poll interviewers. But they will, as the online pollsters argue, input their true plans into an anonymous computer.

The traditional firms argue that only about half of UK households are on line and the distribution is skewed towards the more prosperous social groupings. There’s also concern that, as the Times’s pollster, Populus, states, “internet polls work by getting people to register for a panel that is then invited to take part in surveys run from a website. This means that the sample for Internet polls is inherently likely to be more politically engaged, and knowledgeable, than the electorate as a whole and that it is, to a considerable degree self-selected, rather than random.”

The firm also argues that the number of people on Internet poll panels is relatively small, about 30,000, so the same group inevitably gets repeatedly polled – making them less and less typical of the population as a whole.

In an article after the Scottish Elections last year Peter Kellner, the political journalist who heads YouGov, argued that the firm has now conducted six polls whose figures could be tested against real events and in each in case it was right.

For political gamblers this issue could not be more important. All the traditional opinion pollsters are currently showing Labour leads of between 2% and 8%. Last month YouGov poll (there’s a new one out this week) had a Tory lead of 5%.

However bad things might sometimes appear Labour is going into the next election knowing that it’s almost a foregone conclusion that it will come out as top party. The way the Westminster seats are distributed makes Michael Howard’s task of winning most seats, let alone getting a majority, almost impossible.

A top Cambridge and now City mathematician, Martin Baxter, has created his own model of the UK scene together with an incredibly useful table called the “Battlemap” that illustrates very sharply how the odd are stacked completly in Labour’s favour.

His current prediction, based on all the latest polls, is that Labour will an overall majority of 42 EVEN THOUGH the Tories will get more votes. This is his March 2004 forecast:-
CON 36.20% of votes – 222 seats
LAB 35.24% of votes – 344 seats
LD 21.16% of votes – 49 seats

Thus the Tories get 3 full percentage more in the popular vote but are 57 short of Labour. The outcome of this prediction is even more startling because UK Elect has built in an element of tactical voting AGAINST Labour.

In both forecasts the LDs get a miserable return for their votes.

It’s starting to looking pretty black for Charles Kennedy. The Guardian, which has been the most supportive paper since he failed to turn up for the budget ten days ago, has now joined the media bandwagon with a huge feature today speculating on who will take over from him.

But how will he actually go? I can’t see the LDs creating a situation like the one that saw the Tories boot out IDS last November. If he does go then it will be his decision and maybe the health factors will provide a good reason.

Many in the party are saying privately that CK totally wasted the extraordinary opportunity of the 2 years of IDS’s hapless leadership of the Tories to make the LDs central to UK politcal life and position the party as the only alternative to Labour. Now with the public trust in Blair having collapsed he is failing to take advantage again. My reading is that his heart is no longer in the job and I would not be surprised to hear him make a statement after he returns from the Easter break.

I backed the Democrats at 3.05 on Betfair in January and have now come out taking a profit. Anything below 2.5 does not look good value – sadly.

PoliticalBetting.Com was established by Mike Smithson to provide a discussion platform and an information service for political gamblers and others keenly interested in the electoral processes and forecasting outcomes.

For 13 years Mike was a journalist with BBC News and was part of the team in the mid-1970s that handled the first Broadcasting of Parliament experiment. This was followed by regular stints at Westminster. In 1977 he ousted Denis McShane, the current Foreign Office Minister, as the National Executive member for the UK’s Radio and TV journalists at the NUJ.

He was a founder member of the Liberal Democrats and stood for Parliament at the 1992 General Election. He was elected twice as a County Councillor in Bedfordshire and has also been a Borough Councillor in Bedford.

Unless stated all articles are written by Mike Smithson who will endeavour to ensure that all material is accurate when posted. However Politicalbetting.com can accept no respnsiblity for the information on the site and users should make their own checks before making a bet or taking any other action. The site can accept no responsiblity either for the content of linked sites.